How can sustainability and economic efficiency be combined in transport? Ingo Geerdes, Managing Director of Sales at Fahrzeugwerk Bernard Krone GmbH & Co. KG, spoke about this in a digital conference with Dr. Moritz Petersen, Academic Director of the Center for Sustainable Logistics and Supply Chains at Kühne Logistics University (KLU) in Hamburg.
What can (and should) sustainable logistics and its supply chains look like, and where are we currently on the road to achieving this?
Moritz Petersen: We focus on reducing emissions in our work at the Center for Sustainable Logistics and Supply Chains, because we firmly believe that it is the most urgent concern. The aim here is to have supply chains that emit as few pollutants as possible. You’ve got to be honest and say that the business world is not yet treading a good path when it comes to this topic. Total emissions are on the increase globally: Even though logistics has become increasingly efficient in recent years, transport volumes are growing. There are many appropriate and good developments taking shape that can reduce the share of logistics in emissions. An increasing number of logisticians are setting themselves truly ambitious goals – even if they openly admit that, to date, they only know in part how to achieve them. But that is essentially the right approach, in order to then look for possible ways together with partners. And those partners include vehicle manufacturers such as Krone.
Ingo Geerdes: As a commercial vehicle manufacturer, we are part of logistics. We ourselves can reduce emissions in the production and fitting out of our products. And these products, in turn, help customers to emit less CO₂ – especially through the digitisation of the trailer. But weight optimisation, aerodynamics and other aspects also play a major role. Price pressure being exerted on the transport market is very high. Of course, we keep this in mind and develop products that are effective and affordable at the same time.
What challenges do freight forwarders face, and what product solutions does Krone offer to meet them?
Geerdes: In addition to the aforementioned price pressure, our customers are confronted with numerous other challenges, such as government regulations and a shortage of drivers. Our telematics systems help to make highly efficient use of both drivers and equipment. To ensure the maximum capacity utilisation of transport operations, we offer 360-degree monitoring of the trailer, which, among other things, displays available load space. In addition, geo, telemetry and cooling data, as well as other information about the vehicle, is collected. In the event of any deviations, for example, a drop in tyre pressure, a notification is generated and sent to initiate appropriate measures. Acting quickly then also has a positive effect on fuel consumption, material wear and delivery reliability. Predictive maintenance is simply inconceivable without telematics. Furthermore, we are making an important contribution to road safety.
Our telematics portal is open! We can integrate data from other service providers and vice versa. We can also provide the necessary interfaces. And by the way, this networking also works with truck manufacturers. Of course, central registration on a portal renders the dispatcher’s work much easier.
Alongside all these effects, the intermodal capability of our products also plays a key role. They can be transported both by rail and by water. If even more capacity were available on the part of railways, it would be possible to significantly increase the proportion of trailers transported on trains and thus make a further contribution to reducing CO₂ emissions.
Petersen: You mentioned price pressure: Shippers and recipients still want to pay as little as possible for logistics services. At present, however, you can see in sea freight that there is still some room for manoeuvre: Freight rates are skyrocketing, and shippers will pay virtually any price to get their container on a ship. So there is another way! Logisticians, especially in road transport, are usually medium-sized companies and only receive a very small margin. It is understandable that they do not rush ahead of the pack and completely overhaul their vehicle fleet to reduce emissions. The investments must also be realistically feasible.
Geerdes: You are absolutely right. Nevertheless, the wider population must also be sensitised to the importance of appreciating transport more. Free returns, for example, send the wrong message. Transport costs money – especially if it is to be ecologically sustainable.
Has this perception of the industry changed as a result of the Coronavirus pandemic?
Petersen: An awareness of the relevance of logistics for general supply and for the functioning of the economy has certainly increased among the population. In certain cases, there were supply bottlenecks last spring, for example, for toilet paper or medical supplies, because demand was suddenly so high. But apart from that, everything looked pretty good. In principle, however, a change in terms of sustainability in logistics will not stem from the consumer. It will also not work with just one interest group at the wheel, rather, everyone needs to get involved. The manufacturers of assets, like you as Fahrzeugwerk Krone, have the potential to utilise significant leverage, and this does happen. However, it is still a fairly recent development to see companies that actually manufacture a vehicle become involved in other issues such as their capacity utilisation. Furthermore, logistics service providers are also involved in this, who can for example, specifically build up a low-emission vehicle fleet and plan their routes wisely.
What about government regulations?
Petersen: They certainly have the greatest impact. The market works when the thing you want to avoid has a price. And it has to be high enough. As soon as it becomes financially more attractive to invest in environmentally friendly solutions, more will happen. The legislator has plenty of leverage with the CO₂ tax. It remains to be seen whether it will be sufficiently exploited.
How can the freight forwarders be supported?
Geerdes: Most entrepreneurs in this business shy away from investments where the return on investment (ROI) is too long-term from their point of view. Therefore, it is also a requirement for us manufacturers to find solutions here. For example: About a year ago, we built a first refrigerated trailer with a partner in which the refrigeration unit is not powered by diesel, but rather by electricity. A recuperation axle recovers energy here, which is stored in the trailer. The vehicles have to be in use for a relatively long time, in order for it to pay off, however: Sustainability comes included. I think it is important for hauliers to know that such vehicles are already in use. We started producing these trailers a long time ago and will continue to expand this segment going forward.
The key term being “alternative drives”: Which technology will prevail?
Petersen: No one can say for sure. Essentially, this depends to a large extent on the vehicle’s usage profile. There is no one best solution. It is often perceived as a situation requiring an “either-or” decision, but there is a big difference as to whether we are talking about last mile delivery or long distance transport.
Geerdes: I also believe that we will eventually use a mix of different technologies. We lack the necessary infrastructure for the widespread use of electric trucks. In the same way, we will not be able to get all goods onto the railways. It is important to make the best use of the resources available. In cooperation with the software manufacturer Shippeo, for example, we are working on a digital solution that calculates the arrival time of a particular transport operation very precisely – so that the customer knows when his cargo will arrive. This helps to make processes much more efficient. We have also founded Rytle, a company that enables the last mile delivery of goods via the use of city hubs and e-bikes. We want to be fully present in the supply chain and make it as efficient and CO₂-neutral as possible.
Petersen: I think this is also a good example of the fact that it is not about simply improving things that have always been done in a certain way in the past with a different drive, but rather about designing the system in a fundamentally different way. The CEP service providers don’t like to hear it, but a white-label solution could also be the right way to go.
Geerdes: This is without doubt an exciting approach for the entire industry in the future. Today, many transport containers have a company logo. With rental companies, we see that neutral vehicles can be used by different transport companies. Perhaps in the future, there will be anonymised load carriers that are used by different customers, thereby achieving greater capacity utilisation. That may still be something of a pipe dream, but it is a conceivable scenario.
What advice would you give to freight forwarders: What are their most important tasks in terms of delivering greater sustainability?
Geerdes: From our point of view, digitisation enables equipment to be used much more efficiently. At Krone, we want to do our part by making our containers and trailers ever smarter so that our customers can transport their products with increasing sustainability.
Petersen: Hauliers should do what they have always done: Doing business in the best possible way. And they should get involved with alternative drives and see if they can run pilot tests, or exchange ideas with others who have already gained some experience with these technologies. There are many companies that adopt a pioneering role and which encourage others. Actually, no one needs courage in logistics – the industry itself is bold. But dealing with it is a very prudent step, for sure. As a freight forwarder, you have to be aware: Even if it seems best in the short-term to carry on as before, in the mid-term, it may become inconvenient if larger clients place more emphasis on low emissions. At the same time, logistics cannot tackle the big issue of sustainability alone. It requires framework conditions that allow it to do so with economic efficiency.
Geerdes: This economic efficiency and sustainability are, of course, very important and safeguard the continued existence of the company, our environment, and us all. This requires the continued development of our products and technologies, as well as the open-mindedness of everyone to make good use of them.
About Ingo Geerdes
Ingo Geerdes, born in 1969, has been with Krone for three decades. He has held various management positions in the company, and has served as Managing Director of Sales since 2017. He is also responsible for the Krone-Fleet and Krone-Used divisions.
About Moritz Petersen
Moritz Petersen, born in 1984, researches and teaches as an Assistant Professor of Sustainable Supply Chain Practice at Kühne Logistics University (KLU) in Hamburg, at the interface of environmental sustainability and digitisation. Having obtained a doctorate in engineering, he is the Director of the Center for Sustainable Logistics and Supply Chains (CSLS) at KLU.